.The Russell 2000 might have an earnings problem.Though the small-cap mark got 10.1% in July, it is actually lost around 4% until now in August, as of Thursday morning.ALPS' Paul Baiocchi achieves the unstable moves to the index's overall composition, with an estimation coming from Beauty Global showing 40% of those providers have adverse revenues." [Financiers] have essentially surrendered themselves to the reality that through remaining in the Russell 2000, I am actually only mosting likely to need to take the excellent with the negative," the organization's chief ETF planner told CNBC's "ETF Edge" this week.To avoid the earnings drag, Baiocchi recommends clients focus on high quality providers, considering more careful exchange-traded funds including his organization's mountain range O'Shares USA Small-Cap High Quality Dividend ETF Shares (OUSM)." The idea is high quality firms that pay and increase their dividends, and importantly, possess a lot less dryness than their peers," he said. "It makes it possible for advisors as well as capitalists that have actually observed little limits go laterally for 5 years to be assigned to a category that is actually lagged." In addition to its success display screen, the fund includes merely 107 inventories u00e2 $" a fraction of what's inside the Russell 2000. Its own leading three holdings are Tradeweb Markets, Juniper Networks and also Old State International, each sitting at an around 2% weighting in the fund, every FactSet.Shares of the small-cap fund are actually down 1.5% month to day u00e2 $" exceeding the Russell by more than 2 percentage points because time.Disclaimer.